The risks of not innovating
If an economic recession happens, how do you anticipate your technology innovation strategy/investments will change? (TMT Industry Respondents vs. All Respondents)
Innovation is the lifeblood of technology, media and telecommunications (TMT) companies and the catalyst behind products and services that are driving dramatic, far-reaching and lasting changes for consumers. According to the Global Technology Survey, which includes a sample of TMT executives from mostly large publicly traded companies, TMT companies are spreading innovation activity around three areas:
- Optimisation of current systems, products, processes and more
- Building resilience against disruption
- Growth (e.g., new markets, revenue)
Below is a summary of other key findings from the survey:
- A tool for growth. TMT companies are prioritising innovation for growth more than the other industries represented in the survey. The results show that one-third of TMT organisations are focusing activity in this area, compared with 29% overall.
- Optimisation is even more important for TMT companies. IT executives in this industry group report that about 40% of their company’s current innovation activity is devoted to such efforts. This suggests TMT companies are looking to make the most of existing technology investments and improve efficiencies at a time when many are streamlining operations to save costs, reduce redundancy and overstaffing, and meet changing expectations from customers.
- Innovation goals and strategy. The survey shows that 82% of TMT businesses are forging ahead to meet clearly defined innovation goals — although only 58% of IT executives in the industry describe their organisation’s innovation strategy as “clear.” That finding may reflect the current economic climate, which requires agility so that companies can continue innovating to stay competitive while being prepared to pivot if conditions suddenly change.
Top challenges to innovation
Which of the following best describes your organisation’s top three challenges when it comes to innovation?
IT executives in the TMT industry group see many obstacles to innovation for their organisations — and the survey shows security risks are the greatest worry.
Like all businesses, TMT companies must continuously evolve security defenses so that they can protect their operations, people, data and intellectual property from existing and emerging cyber threats. For those firms responsible for developing and maintaining critical technology infrastructure, the security stakes are even higher.
Why it matters: TMT businesses are primary targets for attackers. In addition to increasing their overall cyber resilience, they must ensure that the products and services they provide to customers have security built in and can be updated to the extent possible as new vulnerabilities and threats surface. They must also be vigilant about cyber risks within their supply chain — and insider risks, as well.
Innovation itself creates security risk for TMT companies. According to the survey, all IT executives in the TMT industry group expressed concern about security risks, like data breaches, stemming from the implementation of innovative new technologies. Half of these leaders reported that they are “very concerned” about this issue.
Overregulation is a constant concern
Complex and costly regulatory and compliance requirements represent the second-greatest challenge impeding innovation for TMT organisations. The survey results show understanding and meeting the demands of stringent data security and privacy mandates are no doubt top-of-mind concerns for IT executives.
What’s next: There is also the question of regulatory requirements that will apply to emerging technology, like artificial intelligence (AI), which TMT firms are at the forefront of developing and deploying. Legislation related to regulating AI, the Artificial Intelligence Act, has already been introduced in the EU. IT leaders are worried about the potential risks of forging ahead with new technology initiatives in AI and other areas that could be derailed or require significant rework as new regulations come into effect.
Regulatory efforts focused on online content moderation are another source of concern. In the EU, for instance, new rules have been enacted to address longstanding concerns about online trading of illegal goods and services, the sharing of harmful content, the use of manipulative algorithmic systems to spread misinformation, and the control of essential ecosystems in the digital economy by a few large platforms.
Also positioned among the top three risks is the lack of governance and infrastructure. For many IT executives, concerns about this risk are closely tied to security and compliance worries — and amplified by other dynamics, such as the growing need for the business to stay on top of environmental, social and governance (ESG) material issues, which include data privacy and security.